Question

Maninder invested Rs. 25,000 at 15% p.a for 3 years interest compounded annually and Rs. 25,000 at 10% p.a for 12 years, interest compounded half yearly. Find the difference in interests?

Answer 1

compound interest = P (1 + r/100)^n

Amount accrued with interest at 15%
   = S1 = 25,000 (1 + 15/100)^3

Amount accumulated with 10%
      = S2 = 25, 000 [1 + (10/2) *1/100]^24
     there are 24 compounding intervals of 6 months each, and the
                     interest for 1/2 yr is 10/2%

Difference = S2 - S1.